Corporate NPS: Securing The Future With Long-Term Planning, Flexibility, And Tax Benefits

As life expectancy increases with medical advancements, the reality of ageing cannot be ignored. A longer life span means long-term financial planning, too. To highlight this, the Pension Fund Regulatory and Development Authority (PFRDA) and Outlook Money held the third edition of the Retire Smart: Financial Wellness Leadership Series initiative in Jaipur on September 2, 2026. 

Khushbu Shukla, assistant general manager (AGM), PFRDA, said: “Your life is not just about today. Twenty years down the line also means something for yourself; that is why it is important to plan.” She emphasised that retirement planning is not just about bringing financial security, but also preserving dignity and independence when a person stops working. 

As the joint family structure fades, so does the ‘joint-family support system’, giving rise to new demographics, like double income, no kids (DINK) households. Accordingly, long-term planning also becomes essential. However, many young individuals look for immediate gratification and spend on momentary pleasures, like “avocado toast” or premium coffee rather than saving, she said.

Shukla also presented data on ageing costs and retirement readiness.

The cornerstone of the presentation was the National Pension System (NPS), which is recognised as a low-cost financial product of its kind, how it operates, its ecosystem, regulated architecture, investment choices, tax benefits, and how corporate NPS can help both employees and employers to make India a financially secure society. 

Shukla said that the availability of over 100 points of presence (PoPs) makes onboarding new subscribers simple. Explaining the process, she said that a Permanent Retirement Account Number (PRAN) is given to each subscriber. Central recordkeeping agencies (CRAs) manage the PRAN, and the trustee bank and pension funds manage the funds.

She presented the data about NPS, the tailored NPS options, such as Tier I and Tier II, where Tier I is the primary retirement account that offers tax benefits, while Tier II is an optional account without lock-in, and is available at the same low-cost structure. 

She also informed the gathering about NPS features, such as Active and Auto Choice, lifecycle funds, minimum contribution, flexibility in contribution amount, the three asset classes (equities, corporate debt, and Government securities), tax benefits, and the flexibility in withdrawals. She also mentioned the few options available under the New Tax Regime (NTR) that offer tax benefits. Corporate NPS is one of them. Under this NPS model, employer contributions up to 14 per cent (capped at Rs 7.50 lakh) are tax exempt from taxes, she said. 

Besides, the accumulated corpus, up to 60 per cent of the corpus withdrawn at the age of 60, is also tax-free. However, the subscribers are free to withdraw up to 80 per cent of the corpus, but the remaining 20 per cent has to be used for buying an annuity for a monthly pension and remains subject to slab-level taxation. In case of a subscriber’s death, the nominee can withdraw the corpus, depending on the annuity option that had been chosen by the subscriber. 

Shukla concluded the session with a live demonstration of the NPS calculator, showing how a regular investment can secure the targeted monthly pension and secure people’s future.